As part of an appropriations measure, Congress passed a flurry of new tax legislation at the end of 2019. These new rules may have an impact on 2019 tax returns to be filed in 2020.
Notably, the “Taxpayer Certainty and Disaster Tax Relief Act of 2019” extends through 2020 several tax breaks for individuals that had officially expired or were about to expire. This includes the tuition-and-fees deduction, the lower medical deduction floor of 7.5% of adjusted gross income (AGI), the tax exclusion for debt forgiveness on a mortgage for a principal residence and the deduction for mortgage insurance premiums. The extenders on the businesses side include the family and medical leave credit and the Work Opportunity Tax Credit (WOTC) for hiring workers from disadvantaged groups, as well as various industry-specific tax incentives. Finally, the new law repeals three taxes authorized by the Affordable Care Act (ACA).
The “Setting Every Community Up for Retirement Enhancement” (SECURE) Act, the biggest retirement law in the last decade, generally takes effect on January 1, 2020. Among other significant changes, it effectively eliminates “stretch IRAs” allowing non-spousal beneficiaries to postpone required minimum distributions (RMDs), increases the age for starting RMDs from 70½ to 72, allows individuals over age 70½ to contribute to traditional IRAs, provides enhanced credits for businesses that start up a qualified retirement plan and enhances certain employee protections. The SECURE Act also reverses a scheduled change in the way the “kiddie tax” is calculated.
If you have any questions about how the new legislation affects your 2019 return or other tax aspects, please do not hesitate to contact our office in Huntsville or Pensacola. We would be glad to schedule a meeting to discuss your personal situation.